Here is a debate Question

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Here is a debate Question:  What is the best Lease Agreement to use?  A month to month or Annual?

I will start off.  

I prefer to have a Month to Month Rental Agreement. The reason being is that if it doesn't pan out,  all you have to do is give them a 30 day notice or a 60 day or a 90 day notice, depending on your state law.  

If you have an Annual Rental Agreement, then you are stuck with each other.  Now, the Pro's about having an Annual Rental Agreement is that you are somewhat assured of having a tenant for a full year.  However, not always, because a lot of times tenants want to leave before their Annual Lease expires. 

Many times landlords find some tenants hard to deal with and wished they had them on a month to month rental agreement, because they maybe controlling, or a pain in the rump,  always complaining.  Many issues.  

I see it this way.  Why complicate matters by having someone sign a lease for a year, when in the end, you don't have as much confident they will stay a year any more than a tenant staying on a month to month.  I have had month to month tenants who stayed for as long as 17 years.  Most of my tenants are long term, month to month tenants.  They usually stay a long time because they can leave any time they want and they feel more relaxed.

Even though the courts will hold a tenant responsible for the rent on an Annual Rental Agreement for the entire length of the lease,  the courts will also hold the Landlord for trying to rent out the property and show a strong effort to do so.   Both parties need to make an effort to rent the property out again.   And the Judge will decide which party didn't try so hard and award a Judgment accordingly.

I like to make my life simple.  Therefore, I always do a month to month rental agreement.

Nancy Neville

Next please

@Nancy Neville ,

I personally do M2M for all the reasons your stated above.   I like the control as the landlord, and the flexibility!   I would bet the high majority of lawsuits and stuff with year long leases.

My mentor suggested I start with as 12-month lease, and then convert to M2M, just because it's a psychological commitment for someone to be there for 1 year.   He said if you start M2M, people might view it as easy to get out of, whereas when they have been there a year, it's pretty standard they'll stay longer.      

They both has + and - qualities. I have some that are M2M and others that are annual. I always start out with a tenant with an annual due to sales tax laws in the state. 

We focus on screening them well and then put them on a 1 year lease.  We'll even renew their lease for another year at a time when it expires.

I have changed my mind on this one I use to think 2 years lease was good because I did a back ground. Well back ground can’t weed out everything, making for a bad situation for me some times.

I now do a 1-year lease then month to month after that. If things go south fill in the blank, I have the flexibility to give a 30-day notice.

M2M with an addendum stating rent will not increase for one year.  This removes one of the biggest tenant fears and gives me and my clients the best protection against an unlikely bad tenant.

Originally posted by @Billy Smith :

I now do a 1-year lease then month to month after that

 That's what we have done for 20 years. renting a place is such a hassle I don't want to do it for less than a year occupancy, but after that who does it serve? Also, in NJ lease renewals are generally mandatory so I can't kick out a tenant anyway.

Silly question. How do you set up a rental agreement renewal for month to month? Do they sign each month?

Originally posted by @Maria Durflinger :

Silly question. How do you set up a rental agreement renewal for month to month? Do they sign each month?

Here is how mine reads. 

 TERM: Tenant shall lease the Premises for the calendar period beginning___________________ and ending____________________. In the event that Landlord or Tenant does not elect to terminate this Lease at the ending date therein (with 30-day advanced written notice), then the term of this Lease shall continue on a month-to-month basis.

They do not sign every month. I have them sign a lease beginning 1st of the month and ending on the 31st then continues month to month thereafter until they or I terminate the lease with 30 days notice. 

They both have benefits but I prefer a one-year lease for a couple reasons:

1. It provides security. The vast majority of tenants will stick it out, giving security to the Landlord.

2. It's a money generator. If the tenant breaks the lease, they face a penalty that can result in additional income to the Landlord. If they renew, you can hit them with a lease renewal fee or rent increase. 

I always hear people talking about the simplicity of a month-to-month because it enables them to get rid of bad tenants easily. If you screen tenants well and have solid policies, evicting them is rare and easily done even under an annual lease.

Originally posted by @Nathan G. :

They both have benefits but I prefer a one-year lease for a couple reasons:

1. It provides security. The vast majority of tenants will stick it out, giving security to the Landlord.

2. It's a money generator. If the tenant breaks the lease, they face a penalty that can result in additional income to the Landlord. If they renew, you can hit them with a lease renewal fee or rent increase. 

I always hear people talking about the simplicity of a month-to-month because it enables them to get rid of bad tenants easily. If you screen tenants well and have solid policies, evicting them is rare and easily done even under an annual lease.

 I agree. The ones I screened, I placed on 12month lease, the ones I inherited, I had them sign month to month.

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